More cars become exempt from the charge and the Western Extension is removed,
but prices for vehicles driving into the heart of the city will increase.

From January 4 any vehicle emitting less than 100g/km of CO2 will be exempt from paying the London Congestion Charge.

At present, only alternative fuel or hybrid cars are eligible for the discount, worth £8 per day driven in the centre of the capital. However, the new rules see the replacement of the Alternative Fuel Discount with a Greener Vehicle Discount, meaning that any sub-100g/km vehicle that also meets Euro 5 standards for air quality will qualify, subject to a £10 registration fee. This will include a handful of diesel models from Audi, Volvo, Vauxhall, Seat, VW, Ford, Peugeot, Renault and Toyota.

The changes come after Transport for London's Congestion Charge public consultation, in which 13,000 people took part.

It has also resulted in the scrapping of the Western Extension from December 24 this year, a move that will result in an estimated £55m reduction in annual revenue for TfL.

The Mayor of London, Boris Johnson, said: "The people of west London had the Western Extension unfairly foisted upon them and they have now voiced their antipathy for it loud and clear on several occasions.

"After negotiating a testing course of several legal hurdles, I am delighted to be able to confirm that it will now be removed by Christmas. It will be vanquished, annihilated and obliterated, with road markings literally blasted from the earth over the festive period," he added.

Another change to the scheme will be the introduction of an automatic payment system, CC Auto Pay, on January 4. TfL claims this will remove the need for anybody to ever be fined again.

Even drivers using CC Auto Pay, however, will have to pay an increased rate, as the daily charge climbs from £8 to £9. Opt not to use the auto pay facility and the cost rises further to £10 in advance or on the day, or £12 if paid the following day.

Mr Johnson said: "It is essential that the Congestion Charge is made fairer and more effective, but also that it continues to do what it says on the tin and remains a deterrent to all but essential journeys into the heart of the Capital. I have therefore taken the difficult, but nevertheless crucial decision to increase the daily charge to £10. However, motorists can take comfort in the new CC Auto Pay accounts that will mean a £1 discount and the peace of mind that never again will they get clobbered for forgetting to pay the charge."

Drivers using CC Auto Pay will be billed each month rather than paying on a daily basis.